Amazon plans a makeover, to launch its in-house beauty products

BENGALURU | MUMBAI: After Flipkart-owned Myntra, Amazon India is preparing to launch its own brand of beauty and personal care products, as the country’s top two digital retailers chase a fastgrowing cosmetics market dominated by much smaller startups.

“Amazon India is talking to contract manufacturers and will be launching private labels (in-house brands) in a few categories within skincare and makeup,” said one of four people familiar with the company’s plans, requesting anonymity.

Amazon India and Flipkart have increased focus on the high margin cosmetics category as growth in the larger online apparel market decelerates but experts caution they need to establish themselves in the category before introducing their own brands.

Amazon India already retails 2 million beauty products across 19,000 brands. A spokesperson for Amazon India declined to comment except to say that beauty and personal care is a “strategically important category” for the company.

Myntra, which sells beauty products across more than 100 brands, is expected to launch its beauty and personal care brands this year in addition to retailing through offline stores in collaborations with international brands.

“The beauty and personal care segment will be one of the key areas of focus this year and we are looking at strengthening our portfolio by adding more international masstige brands,” said Ananth Narayanan, chief executive of Myntra and Jabong, also owned by Flipkart. “We are looking at a contribution of about 8% (from the beauty segment) to our overall revenue by 2020, from the current 1%.”

The domestic online beauty and personal care market is expected to cross $3.5 billion by 2022 from about $300 million now, according to Red-Seer Consulting. The online apparel market is worth $3.8 billion, growing at a modest 10-12%.

For Indian beauty brands such as Maybelline, Lakme and VLCC, ecommerce has become the fastestgrowing channel in terms of revenues. About 20% of Maybelline’s total India sales in 2017 came from online marketplaces.

“We have definitely added consumers (from tier 2 and 3 towns) through our online presence. With our retail footprint alone, (we) would not have had the same access earlier,” said Shalini Raghavan, chief marketing officer, consumer products division, at L’Oréal India. India’s online beauty market is dominated by Nykaa, which commands a 33% share, and other startups such as Purplle. Five-year-old Nykaa closed 2017 with gross merchandise volume, or gross sales, of.Rs1,000 crore, according to chief executive Falguni Nayar.

“We are a multi-brand retailer first, like a Sephora. But we are also selling our private labels through online and offline channels because we want to be a full-fledged brand like a Lakme or Maybelline,” Nayar said. The company hosts more than 850 brands on its platform and plans to bring more international brands to India this year, in addition to Bobbi Brown, Estee Lauder and Huda Beauty that it has brought onboard so far. Nykaa’s in-house brand Nykaa Cosmetics contributes 10-12% of its overall revenue, according to industry experts.

The company is also looking to expand its offline presence to about 50 stores by the end of 2018-19, from about 13 now.

Purplle, which has a foothold in about 13% of the market, plans to open five stores in Mumbai this year. The startup also plans to introduce its own brands within sub-segments of makeup and skincare in the coming months, hoping these would form 8-9% of its overall revenues by 2018-19.

“Nykaa has picked up high momentum over the last 1-2 years and has created its own community when it comes to cosmetics,” said Shubham Anand, head, retail, at RedSeer. “In the short-term, it may be tough for Amazon to match up, but in the long-term they could, considering its (financial) resources.”

Industry experts anticipate Amazon India’s recent partnership with Shoppers Stop to bear fruit this year, with the e-tailer growing its private-label business by leveraging the retail giant’s chain of stores to build a steady distribution channel for its beauty products.

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